Dai Truong's Cannabis Newsletter - Issue #32
5 Things I Wish Someone Told Me Before I Started Leading a Cannabis Business, with Michael Steinmetz and Len Giancola
Michael is the CEO and co-founder of Flow Kana, California’s largest seller of sun-grown cannabis. Working with more than 200 independent craft family farms, Steinmetz aims to transform cannabis into the world’s first fully sustainable agricultural product, thus ushering in a new era of farming, rooted in environmental stewardship, transparency, heritage, and shared equity. Originally from Caracas, Venezuela, Steinmetz and his wife, filmmaker and environmental activist Flavia Cassani, founded Flow Kana after touring Northern California’s famed Emerald Triangle in 2015. The Emerald Triangle is home to more than 53,000 independent, small-scale farmers, many of whom have lived off-grid for generations, practicing sustainable and regenerative farming methods that feed and cool the planet, while supplying organic fruits and vegetables to their communities. Flow Kana was born to help these farmers reach scale, while preserving their culture and bringing conscious consumers an unparalleled, premium sun-grown product. Over the past four years, Steinmetz has grown Flow Kana to become Mendocino’s second largest employer, and California’s number one selling flower brand. Inspired by the Sunkist model — which handles the processing, distribution, and packaging of citrus fruits but does not grow a single orange — Steinmetz sees his company as part of a new wave of ‘regenerative capitalism’ that keeps the land rich and the local economy thriving. In February 2019, Flow Kana secured a record $125M in funding — the largest raise of a U.S. privately-held cannabis company to date. Steinmetz calls the cash infusion ‘rocket fuel’ for the goal of creating an audacious infrastructure that empowers small-scale food and cannabis farmers to compete nationally.
Cresco Labs Receives Adult-Use Approval for All Five Existing Illinois Dispensaries
Cresco received approval for adult-use cultivation on September 30thmaking it the only company approved for both adult-use cultivation and adult-use dispensary operations in the state.
“Illinois is Cresco’s home state and with the transition to a legal adult-use market in January of 2020, the state is expected to produce between $2 – 4 billion in sales at maturity (BDS Analytics)i, making this one of the single largest opportunities in the U.S. cannabis space today,” said Charlie Bachtell, Cresco Labs CEO and Co-founder. “Cresco is well-positioned to capture a significant share of this revenue opportunity for shareholders. We have 25% wholesale share of the current medical market, a portfolio of recognized brands and three cultivation facilities that can represent 630,000 square feet at completion, in what is expected to be a supply-constrained market.”
$1.1 billion worth of cannabis sold in Canada's first year of legalization
Analysists estimate that Canadian licensed producers have sold ~$1.1 billion worth of pot in the past 12 months, the equivalent to 105,000 kilograms—enough weed to fill almost two rail freight cars. However, some industry analysts believe those numbers would be much higher if not for the many stumbling blocks the industry has encountered in the first year of legalization. They cite several problems, ranging from non-compliant packaging to the failure of some producers to increase cultivation capacity in time to meet demand. But according to many analysts, the number one problem has been the regulators.
Cannabis 2.0 is upon us, but are retailers ready for the influx of new products?
Cannabis 2.0 will test how quickly retailers such as the Hunny Pot and the licensed producers that supply them are able to adapt. The introduction of extracts is estimated to add an additional $2.7 billion to the cannabis market, according to Deloitte, but as producers add dozens of new products, retailers may already be facing a crunch in terms of how much of it they can actually carry.
DionyMed Receives Notice of Default and Demand for Payment and Notice of Intention to Enforce Security
The Company is reviewing and considering the Demand Notice and BIA Notice and its options. It will continue to work co-operatively with its major lender towards reaching a restructuring solution for it to continue operating as a going concern for the benefit of its stakeholders. At present, there can be no assurance as to what, if any, alternatives might be pursued by the Company and there can be no assurance that the Company will reach any solution with the Company’s lender, or as to the terms of any such solution, if achieved. Holders of the Company’s shares may face a loss of their investment as a result of a failure to reach a solution with the lender or as a result of a failure to reach a solution that includes holders of shares.
Diem Cannabis gets provisional license for dispensary in Worcester, MA
Provisional licensure allows the company to begin its architectural review process, as well as register its future employees as marijuana agents through the Cannabis Control Commission.
In order to obtain a provisional license, applicants must show that they have the resources and policies in place to remain in compliance with the commission’s regulations. The regulations include requirements to make significant security enhancements to the site, certifications for seed-to-sale tracking software, and the implementation of strict anti-diversion policies to prevent marijuana sales to minors.
A year in the weeds: Why the cannabis industry didn’t take off the way everyone planned
There is no shortage of answers to the question of what went wrong, but one thing seems certain: there is plenty of blame to go around
Cannabis advertising firm Weedmaps cuts 100-plus jobs in response to slow adult-use market rollouts
California marijuana advertising giant Weedmaps announced Wednesday it laid off 25% of its workforce, blaming the slow rollout of recreational marijuana markets in California and Massachusetts and a dwindling pool of outside funding.
Here’s What’s In and What’s Out in Cannabis This Harvest Season
Sun-grown flower. Alt-papers. Dose-your-own edibles. New Strains. Hemp.
Marijuana tech companies face out-of-state competitors, regulatory hurdles
The slow rollout of legal marijuana retailers in MA is not only keeping prices high and the black market alive, but delaying cannabis tech entrepreneurs like Stalk & Beans from signing up a significant amount of new clients.
In Massachusetts, the Cannabis Control Commission has authorized 64 out of 540 marijuana business applicants to either begin retail sales or production. In the state, 26 retail stores are open, and another 192 are in the pipeline.
When it comes to legal marijuana, Fresno can learn a thing or two from Woodlake
Fresno could learn a thing or two from Woodlake. The Tulare County city of 7,649 located about 15 miles northeast of Visalia on Highway 245. The city boasts two refurbished parks (new play structures, picnic tables, arbors and barbecues) and has added one full-time police officer (equipped with a new squad car).
How did Woodlake pay for these things? From the $692,000 the city has collected from Valley Pure (the central San Joaquin Valley’s first legal dispensary) in the form of a 5% excise tax off gross receipts since April 30, 2018, the day the dispensary opened its doors.
For a city with an annual budget of $9.4 million, that’s no insignificant bump.
In addition, the boutiques, taquerias and auto parts stores in downtown Woodlake that have experienced a “15 to 25%” uptick in business since the dispensary opened.
Oregon approves six-month ban on flavored vaping products
Oregon’s Liquor Control Commission and the Oregon Health Authority on Friday, Oct. 11, rolled out a ban on the sale of all flavored cannabis and nicotine vaping products in response to a growing number of cases of acute respiratory illness and death linked to vaping.
OLCC board members unanimously approved temporary rules proposed by the Health Authority after a Portland meeting. The board was responding to Gov. Kate Brown’s Oct. 4 order placing a temporary ban on the products.
What can Massachusetts learn from Colorado’s marijuana industry?
Something Colorado and Massachusetts have in common under legalization is individual municipalities have a lot of power to control pot within their city limits. In Colorado, it looks like certain cities were saying we don’t want it, down the road they changed their mind.
Here, Cambridge voted to delay medical businesses from getting recreational licenses for two years. We didn’t do anything like that in Colorado because we didn’t know it would become a big, billion-dollar business. No municipality, not even the state, has taken steps like that to prevent big cannabis.
When you talk about the saturation, that’s another big piece of it Colorado didn’t foresee at first. At one time, it was common to hear people say things like Denver had more dispensaries than Starbucks. It’s not true anymore. But that was a real critical point of some people in the city. They felt there was just tons of pot shops in their neighborhoods. The city moved to cap those, but it was the city that did it. The state of Colorado has never dealt with this question of are pot businesses going to get too big.
IL Social Equity Program
In the run-up to legalization, which will happen Jan. 1, the 55 existing licensed medical marijuana dispensaries are the only businesses eligible to receive a license to sell recreational pot; the administration’s logic being that they’re best prepared to meet massive demand immediately and safely.
Beginning Dec. 10, license applications open to everyone else, with special competitive advantages to companies owned by “social equity applicants” — Illinoisans who have been arrested for a now-expungeable cannabis crime or who live in areas that experienced disproportionate marijuana enforcement.
Business owners can also get the competitive edge, which includes bonus points in the application process and low-interest loan opportunities, if the majority of their workers meet the “social equity” criteria.
The first round of open applications will be accepted between Dec. 10, 2019, and Jan. 2, 2020, with up to 75 new dispensary licenses to be issued by May 1, 2020, according to the Illinois Department of Financial and Professional Regulation.
Cannabis Packaging Demand to Grow 31% Annually
Demand for cannabis product packaging is anticipated to reach $278 million in 2019, increasing 31% per year to $1.1 billion in 2024. Primary and secondary containers (e.g., jars, bottles, folding cartons) will continue to account for the largest share of packaging demand at 62% of sales in 2024. These containers account for the bulk of unit packaging costs, as they must meet government regulations while also offering aesthetic and performance advantages.
CBD Curious? Try These Next-Generation Products for Athletes
Within the ever-expanding overall CBD market, runners and other athletes are increasingly a focus. This emphasis makes sense, when you consider that many of the touted benefits of CBD—pain relief, better sleep, faster recovery, lower inflammation—are of special interest to people who push their bodies hard. Companies are targeting athletes with higher-potency versions of typical CBD products and different ways to deliver CBD.
Runnerw’s Worlds cover the new wave of CBD products for athletes, grouped by the type of innovation. These are all products I’ve tested since writing The Athlete’s Guide to CBD.
Flowhub Announces $23 M in Series A Funding Led by e.ventures, Evolv Ventures and Poseidon
2019 – Flowhub, the leading cannabis retail management platform for modern dispensaries, today announced it has raised an oversubscribed $23 million Series A financing round led by e.ventures, Evolv Ventures — the venture fund backed by Kraft Heinz — and Poseidon, with contributions from investors 9Yards Capital, former NBA commissioner David Stern and Iqram Magdon-Ismail, the co-founder and former CEO of Venmo, among others. As one of the largest Series A rounds in the cannabis tech industry, this investment is set to position the company as the SaaS solution of choice for solving today’s complex cannabis retail challenges.